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petitioner made permanent improvements that increased the value of
the property11 by removing a major building component and replacing
it with a new and safer component, thereby improving the original
condition of the building; (3) petitioner permanently eliminated the
asbestos hazard that was present when it built the building,
creating safer and more efficient operating conditions and reducing
the risk of future asbestos-related damage claims and potentially
higher insurance premiums; (4) the asbestos removal and the
remodeling were part of a single project to rehabilitate and improve
the building; (5) the purpose of the expenditure was not to keep the
property in ordinarily efficient operating condition, but to effect
a general restoration of the property as part of the remodeling; and
(6) section 213 and section 1.162-10, Income Tax Regs., are not
analogous to the present case.
The parties also disagree as to whether the Plainfield-Union
test is appropriate for determining whether petitioner's asbestos
removal expenditures are capital. Petitioner contends that it is
the appropriate test because the condition necessitating the
10(...continued)
Appeals held that the funds expended by the taxpayer in that case
were to "maintain * * * [a store] in a safe condition and may be
properly classified as repairs and deductible as an expense." 10
B.T.A. at 1152. Respondent posits that the operative word
leading to the Board of Tax Appeals' classification of the
taxpayer's expenditures as deductible repair expenses was
"maintain", and not the words "safe condition", as petitioner
suggests.
11 Respondent did not introduce any expert testimony
concerning the value of the Douglas Street building.
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